Nice call, David! (i.e., I’m agreeing with you)
Courtesy of David M Gordon / The Deipnosophist.
Brief update re the markets
Yes, I realize the markets decline as they undergo severely serious tests of crucial support. But that support continues to hold, and an increasing number of divergences between seemingly negative price action and positive underpinnings indicate that the market’s subtle improvement continues to take shape. At this point, the decline is more a matter of time than price; i.e., the general equity markets are close to their lows for this cycle as the budding bottom, now 2 months in process, continues to take shape. This (phase of the) market decline is closer to its ending than to its beginning; I suspect that this possible bottom is mere weeks, perhaps even days, from resolving its moment of crisis.
This notion comes about despite the overt, but obvious, ugliness of the general market’s chart patterns. Of course, I recognize today’s headlines are especially scary — enough to frighten away even the staunchest investor. Please understand, if not accept, that (mainstream) journalism no longer is what it once was; the journalist today merely reports the momentous news of that particular moment, and fails to see the less obvious changes. We each, as investors, must do more than scan headlines and mere reportage to find truth: "Why do stocks decline?" is good for a start. Better would be "Why do most stocks not keep pace with the market’s decline?" And therein lies a tale worth telling.
If you perceive as I do that this moment is an opportunity for long side investors, please recall this crucial investment rule applicable to moments such as now: Purchase the outliers only — the stocks that have declined the least and the stocks that have declined the most. And ignore the great bulk of stocks that crowd the middle. But before you get all cute with your portfolio, this rule excludes Lehman/LEH and AIG, et al. You want to purchase the stocks of companies that you intend to own for a long time… and which will still be around then, leave alone tomorrow.
